Apple joins five book publishers as the target of a European Union investigation into anticompetitive practices in the e-book market.

The European Commission is looking into alleged illegal agreements restricting competition, according to the BBC. In addition to Apple, the investigation is targeting Hachette Livre, Penguin, Harper Collins, Simon & Schuster, and Verlagsgruppe Georg von Holzbrinck.

Apple entered the e-book business with the launch of its iPad in 2010. Since then, the iBookstore has also become available on the iPhone and iPod touch.

In March of this year, the commission conducted "unannounced inspections" of companies in several European countries to conduct its investigations. The deals made by Apple and book publishers "are to be examined for breaches of EU rules on cartels, the Commission said."

Many of the same companies, including Apple, were targeted in a U.S. lawsuit filed in August, accusing them of illegal price fixing. That class-action suit alleges that Apple facilitated a change in e-book pricing to what is known as the "agency model" because of competition from the Amazon Kindle.

The agency model allows book publishers to set consumer prices for e-books that they publish, and also allows the company serving the content to take a cut of sales. That allows Apple to take a 30 percent share of titles sold on the iBookstore.

That differs from the "wholesale model," where publishers simply suggest a recommended retail price. But with the wholesale model, booksellers are free to set their own prices and offer discounts if they choose.

A similar anticompetitive inquiry was initiated in the U.S. in August of 2010. Connecticut Attorney General Richard Blumenthal, after finding that prices of bestsellers on Amazon's Kindle and Apple's iBooks platforms, expressed concerns that the deals made with book publishers could be anticompetitive.

Connotes for people that read this and are still scratching their heads:

Amazon was allowing customers to subsidize the cost of their Kindle with cheap eBooks (e.g. if each eBook is $10 cheaper than the paperback equivalent after you buy 10 books the Kindle has "paid for itself")

The publishers didn't like this because the money used to subsidize the Kindle was coming out of their pockets.

Apple didn't like competing with "free" hardware.

Allegedly under Apple's guidance the publishers colluded to change the pricing model to increase prices and screw Amazon over.

Connotes for people that read this and are still scratching their heads:

Amazon was allowing customers to subsidize the cost of their Kindle with cheap eBooks (e.g. if each eBook is $10 cheaper than the paperback equivalent after you buy 10 books the Kindle has "paid for itself")

The publishers didn't like this because the money used to subsidize the Kindle was coming out of their pockets.

Apple didn't like competing with "free" hardware.

Allegedly under Apple's guidance the publishers colluded to change the pricing model to increase prices and screw Amazon over.

Connotes for people that read this and are still scratching their heads:

Amazon was allowing customers to subsidize the cost of their Kindle with cheap eBooks (e.g. if each eBook is $10 cheaper than the paperback equivalent after you buy 10 books the Kindle has "paid for itself")

The publishers didn't like this because the money used to subsidize the Kindle was coming out of their pockets.

Apple didn't like competing with "free" hardware.

Allegedly under Apple's guidance the publishers colluded to change the pricing model to increase prices and screw Amazon over.

It's slightly different. Prior to the agency model, Amazon was free to price the books as they like, even at a loss. After the agency model was set, Amazon has to sell the books at the prices that publishers say

Connotes for people that read this and are still scratching their heads:

Amazon was allowing customers to subsidize the cost of their Kindle with cheap eBooks (e.g. if each eBook is $10 cheaper than the paperback equivalent after you buy 10 books the Kindle has "paid for itself")

The publishers didn't like this because the money used to subsidize the Kindle was coming out of their pockets.

Apple didn't like competing with "free" hardware.

Allegedly under Apple's guidance the publishers colluded to change the pricing model to increase prices and screw Amazon over.

And your last point is partially mentioned in the Steve Jobs biography.

Still annoys me that many e-books are the same price as paperback books, it's pure profiteering.

At the end of the day e-books do not have to be printed & then shipped, sure you'll still have Apple/Amazon's mark up but then you'd have that at a bookstore. As it's digital delivery Apple/Amazon don't have to have retail stores full of staff that needs to be paid for.

E-books, just like all downloadable content should be cheaper full stop!

There was also the feeling that the prices devalued many books which publishers didn't like. It's hard to get someone to buy a $35 hardcover new release when you can get the ebook for $10.

Considering there are no material costs, printing costs, shipping costs, storage costs, costs to rent space on a store shelf, etc., the ebook should cost significantly less. $35 for a hardcover is and always has been royally outrageous. But $14.99 for the Steve Jobs biography on iBooks? Seems like a much fairer price to me.

Still annoys me that many e-books are the same price as paperback books, it's pure profiteering.

At the end of the day e-books do not have to be printed & then shipped, sure you'll still have Apple/Amazon's mark up but then you'd have that at a bookstore. As it's digital delivery Apple/Amazon don't have to have retail stores full of staff that needs to be paid for.

E-books, just like all downloadable content should be cheaper full stop!

While I believe ebook prices should be lower, I also believe the authors need to and should be paid for the time spent writing/researching/being creative. We pay $8-$15 dollars for an album on iTunes, what's wrong with paying the same for a book? I'm sure the author spent the same, if not more time making it as the musician/band did on their album.

While I believe ebook prices should be lower, I also believe the authors need to and should be paid for the time spent writing/researching/being creative. We pay $8-$15 dollars for an album on iTunes, what's wrong with paying the same for a book? I'm sure the author spent the same, if not more time making it as the musician/band did on their album.

I don't mind paying a fair price, and feel that someone should be rewarded for their hard work.

But, let's say that a new book is £8 at a book store, why should it also be £8 on iBooks or the Kindle Store.

What's more I find that digital contect frequently works out more expensive than traditional media as time goes on. DVD's for example after a year or so they drop into the bargain buckets at £2-3 but are still on iTunes for £9-10.

I know that I have the choice to purchase the traditional media and rip it, frequently I do just this.

Connotes for people that read this and are still scratching their heads:

Amazon was allowing customers to subsidize the cost of their Kindle with cheap eBooks (e.g. if each eBook is $10 cheaper than the paperback equivalent after you buy 10 books the Kindle has "paid for itself")

The publishers didn't like this because the money used to subsidize the Kindle was coming out of their pockets.

Apple didn't like competing with "free" hardware.

Allegedly under Apple's guidance the publishers colluded to change the pricing model to increase prices and screw Amazon over.

You left off one thing:
Apple lets the authors/publishers set whatever price they want and is not involved in setting prices.

So how is Apple guilty of anti-competitive actions? Seems to me that letting the 10,000 publishers set their own prices is PRO-competition.

Quote:

Originally Posted by saarek

Still annoys me that many e-books are the same price as paperback books, it's pure profiteering.

At the end of the day e-books do not have to be printed & then shipped, sure you'll still have Apple/Amazon's mark up but then you'd have that at a bookstore. As it's digital delivery Apple/Amazon don't have to have retail stores full of staff that needs to be paid for.

E-books, just like all downloadable content should be cheaper full stop!

You've left off a couple of big ones:

- Let's say you think your book will sell 100,000 copies, so you print 100,000 copies. But only 50,000 are sold. You've got 100,000 units worth of cost, but only 50,000 sales, so the cost per unit is actually doubled. That problem doesn't exist for eBooks.

- Retailer markup is substantial. In most retail businesses, a 100% markup (50% margin) is common. Apple is taking only 30%.

That said, I disagree with your conclusions. I believe that the publishers should be able to charge whatever they want. The eBook has greater convenience, instant gratification, and doesn't take up space on a bookshelf in your living room. You don't have to dust them, either. So, for some people, the eBook is even MORE valuable than a print book. I believe it should be up to the publishers to try to determine the price that the market will bear. If they guess too high, sales will be low and they may lower their price. The only one with a right to set the price of an item is the owner/publisher. The consumer then gets to say "yes" or "no" (or "I would buy it for $x, but not for $y").

"I'm way over my head when it comes to technical issues like this"Gatorguy 5/31/13

I believe that the publishers should be able to charge whatever they want. The eBook has greater convenience, instant gratification, and doesn't take up space on a bookshelf in your living room. You don't have to dust them, either. So, for some people, the eBook is even MORE valuable than a print book. I believe it should be up to the publishers to try to determine the price that the market will bear. If they guess too high, sales will be low and they may lower their price. The only one with a right to set the price of an item is the owner/publisher. The consumer then gets to say "yes" or "no" (or "I would buy it for $x, but not for $y").

Couldn't you say the same thing with music? I know there is some pricing flexibility in itunes now, musicians and lables are still restricted on how they price/sell their albums. So why the double policy? Why is it wrong for Amazon to want to offer all books at 9.99, but it was great for apple to price all songs at .99. Unless you want to argue that individual books can be of different value but not individual songs. I prefered itunes when it was .99 for everything, just like I preferred amazon when i knew buying an ebook would only cost me 10 dollars. With amazon's buy 3 get 4th free on paperbacks, you pay more for ebooks than you do for paper books, which(IMHO) should never be the case.

Still annoys me that many e-books are the same price as paperback books, it's pure profiteering.

At the end of the day e-books do not have to be printed & then shipped, sure you'll still have Apple/Amazon's mark up but then you'd have that at a bookstore. As it's digital delivery Apple/Amazon don't have to have retail stores full of staff that needs to be paid for.

E-books, just like all downloadable content should be cheaper full stop!

Sigh. Do people understand how the western world's chosen economic system works? The price to a consumer has NOTHING to do with cost. The price, at a macro level, is set by market forces; basically, the price is set at what consumers are willing to pay. It has much more to do with the value proposition.

eBooks may cost the publisher less, but as long as the provide the same value to a consumer, the price will remain the same. If consumers value an eBook less, then the price will eventually fall. Obviously, perceived costs, or lack thereof, may influence the perception of value. But this is countered by other value-added components, like convenience.

It's contrary to capitalism to feel that companies should pass their savings onto their customers.

(Please note that obviously cost does have a bearing on price in that companies have to at least make money. But the equilibrium price is set by market forces; if a company releases a product at the thinnest of margins yet that product is still perceived as a poor value proposition, that product will fail as the price is too high.)

Couldn't you say the same thing with music? I know there is some pricing flexibility in itunes now, musicians and lables are still restricted on how they price/sell their albums. So why the double policy? Why is it wrong for Amazon to want to offer all books at 9.99, but it was great for apple to price all songs at .99. Unless you want to argue that individual books can be of different value but not individual songs. I prefered itunes when it was .99 for everything, just like I preferred amazon when i knew buying an ebook would only cost me 10 dollars. With amazon's buy 3 get 4th free on paperbacks, you pay more for ebooks than you do for paper books, which(IMHO) should never be the case.

Apple no longer prices all songs at $0.99. There is some flexibility in the pricing. I'm not sure how pricing is set and there may be some inconsistency in Apple's policy. For the sake of consistency, publishers should also be able to choose their prices for songs if they're not already able to do that. Still, it's easier to argue that songs are more similar to each other than books are, so songs might not require as much variation in pricing as books do.

I guess it comes down to whether you believe that someone who produces intellectual property should be able to decide what to sell it for. I happen to believe that.

"I'm way over my head when it comes to technical issues like this"Gatorguy 5/31/13

Understand also, that publishing houses (not unlike music labels) are looking at this from a higher level. If you publish 50-60 authors in your house, not all of these are recognized and popular authors. Some are niche authors, or new ones you are taking a gamble on to develop into popular authors. You need to make a minimum run to get enough content on shelves to justify(and hopefully cover) expenses. Thes authors don't just support themselves they support an editorial team, layout teams, cover artists, sales staff, marketing and advertising and of course actual print operations that make the hard/analog copies. On top of that they have to do some R&D to see what (if any) additional content should be included in the digital versions, as well as covering specialized versions (coffee table pictorials, kids versions, braille versions, serialized back story versions). So you gamble on new authors, on formats, on book sellers themselves, with your profits.

If you are going to insist on being an ass, at least demonstrate the intelligence to be a smart one

Allegedly under Apple's guidance the publishers colluded to change the pricing model to increase prices and screw Amazon over.

Selling the same wares at more money than your competitors is neither illegal nor anti-competitive. As I recall Amazon was unhappy with Apple's entry into the market because they were offering the publishers more money per sale than what Amazon was taking. I'm not sure how any of this could be considered anti-competitive on Apple's part, but can see how Amazon's actions of taking an excessive share and threatening to drop all content (including physical) from their store if they agreed to Apple's terms would be anti-competitive.

This bot has been removed from circulation due to a malfunctioning morality chip.

"Connecticut Attorney General Richard Blumenthal, after finding that prices of bestsellers on Amazon's Kindle and Apple's iBooks platforms, expressed concerns that the deals made with book publishers could be anticompetitive."

Is it just me or does this not make sense?

after finding that prices of bestsellers on Amazon's Kindle and Apple's iBooks platforms.....WHAT?

You left off one thing:
Apple lets the authors/publishers set whatever price they want and is not involved in setting prices.

So how is Apple guilty of anti-competitive actions? Seems to me that letting the 10,000 publishers set their own prices is PRO-competition.

You've left off a couple of big ones:

- Let's say you think your book will sell 100,000 copies, so you print 100,000 copies. But only 50,000 are sold. You've got 100,000 units worth of cost, but only 50,000 sales, so the cost per unit is actually doubled. That problem doesn't exist for eBooks.

- Retailer markup is substantial. In most retail businesses, a 100% markup (50% margin) is common. Apple is taking only 30%.

That said, I disagree with your conclusions. I believe that the publishers should be able to charge whatever they want. The eBook has greater convenience, instant gratification, and doesn't take up space on a bookshelf in your living room. You don't have to dust them, either. So, for some people, the eBook is even MORE valuable than a print book. I believe it should be up to the publishers to try to determine the price that the market will bear. If they guess too high, sales will be low and they may lower their price. The only one with a right to set the price of an item is the owner/publisher. The consumer then gets to say "yes" or "no" (or "I would buy it for $x, but not for $y").

If the selling price is higher than the cost to produce plus a fair profit then in a normal market competition will force the price down. It is a different problem though with books. If a publisher signs a popular author or in many cases contributes to making an author popular then they have a monopoly on the author's work. Since there is no competition the publisher tends to charge as much as the market will bear. It is a sign of an unfair market but I'm not sure I would trust any legislator to fix it.

Sigh. Do people understand how the western world's chosen economic system works? The price to a consumer has NOTHING to do with cost. The price, at a macro level, is set by market forces; basically, the price is set at what consumers are willing to pay. It has much more to do with the value proposition.

eBooks may cost the publisher less, but as long as the provide the same value to a consumer, the price will remain the same. If consumers value an eBook less, then the price will eventually fall. Obviously, perceived costs, or lack thereof, may influence the perception of value. But this is countered by other value-added components, like convenience.

It's contrary to capitalism to feel that companies should pass their savings onto their customers.

(Please note that obviously cost does have a bearing on price in that companies have to at least make money. But the equilibrium price is set by market forces; if a company releases a product at the thinnest of margins yet that product is still perceived as a poor value proposition, that product will fail as the price is too high.)

The western economic system does assume that a fair and open market exists. True the price is set by supply and demand but if someone is raking in an excess profit then competitors step in and increase the supply. The western ecomomic system relies on legislation for cases where competition doesn't work (monopolies, market power ...). I don't believe they have been applied to book publishing though.

The western economic system does assume that a fair and open market exists. True the price is set by supply and demand but if someone is raking in an excess profit then competitors step in and increase the supply. The western ecomomic system relies on legislation for cases where competition doesn't work (monopolies, market power ...). I don't believe they have been applied to book publishing though.

This can be an issue IF the publishers and Apple are getting together and deciding what price they will set for a product (in this case eBooks). This effectively reduces what appears to be a competitive market in which there are multiple competing companies which by "free market" principles would drive the price point to where consumers feel it should be, to a monopoly (or oligopoly) where the price is artificially inflated due to illegal collusion.

The idea that Apple offering the publishers a different sales model as being anti-competitive is just stupid. As long as Apple has nothing to do with setting the prices of the eBooks then they are blameless in all of those, other than being the opportunity that the publishers were looking for to break Amazon's stranglehold on distribution of eBooks.

Now, if they are having any say in what prices should be charged then they are in collusion and should be found guilty.

At the same time, I love the agency model. Mainly because, unlike the wholesale model the agency model goes a long ways towards making the publishers obsolete. For the first time in history an independent author has a real avenue for distribution of his books without having to go through a publisher.

This offers the best opportunity of all for the "free market" to destroy the publisher stranglehold of publishers on books. Because, I have to say that nearly every eBook that I have bought from an independent author is lower priced than those from major publishers. The major publishers simply have too much cruft to be competitive, and the agency model presented by Apple is the best means to give the consumer a real chance to vote with their wallet.

Amazon's business model is based around discounting other people's content, as a retailer like WalMart, but doing so over the Internet so as to avoid collecting US sales taxes.

It therefore wants to sell ebooks as cheaply as possible, in part to help lubricate and subsidize sales of the Kindle (which doesn't earn huge margins on its own).

Apple's business model in iTunes is to sell fairly cheap content. It's also a retailer, but it has to balance the low prices desired by iPod/iOS users and the higher content costs desired by content creators (ebooks, TV/movie studios, recording labels) so as to create a functional market that will attract both suppliers and consumers.

Apple looked at ebooks and realized it could add the most value as a retailer by allowing publishers to sell their books for more, a move that would pressure Amazon by erasing its ability to set book prices at $9.99. After establishing a market for ebooks for more than $10, publishers aren't wanting to have to sell their content at that price to Amazon, which is now pissed at Apple.

If the selling price is higher than the cost to produce plus a fair profit then in a normal market competition will force the price down. It is a different problem though with books. If a publisher signs a popular author or in many cases contributes to making an author popular then they have a monopoly on the author's work. Since there is no competition the publisher tends to charge as much as the market will bear. It is a sign of an unfair market but I'm not sure I would trust any legislator to fix it.

That's assuming books themselves don't have competition. Not very many people read any more.

At the end of the day, if people pay for something, they clearly valued it at that price. If they feel it's too expensive, they won't buy, and demand will fall, causing prices to fall.

This is supply and demand at its simplest.

Certain authors or even books in general aren't required necessities, and can be replaced by similar forms of education or entertainment.

...Amazon was allowing customers to subsidize the cost of their Kindle with cheap eBooks (e.g. if each eBook is $10 cheaper than the paperback equivalent after you buy 10 books the Kindle has "paid for itself")

What utter BS is this?
If I can run my store more efficiently by operating a hi-tech cash register, rather than using an abacus, low and behold, the cash register may pay for itself.
What if my hugely lower operating costs allow me to offer lower prices?

Is this unlawful competition?

My take is this: it would be an upside down world if eBooks would cause book prices to rise.
We buy the information either in digital form with minimal distribution costs, or we pay for the machinery of printing, shipping, shelf storage and the supporting sales force. Which has the potential of becoming cheaper.

It is just outrageous that not ALL eBook prices are lower than hard hopy prices. Duh!

I believe it should be up to the publishers to try to determine the price that the market will bear. If they guess too high, sales will be low and they may lower their price. The only one with a right to set the price of an item is the owner/publisher. The consumer then gets to say "yes" or "no" (or "I would buy it for $x, but not for $y").

For those of us that love real books, the benefit is clear: The profit from ebooks helps subsidize the continued sale and production of real books, by keeping the publishers in business. Amazon's approach would have destroyed the publishing houses.

If the selling price is higher than the cost to produce plus a fair profit then in a normal market competition will force the price down. It is a different problem though with books. If a publisher signs a popular author or in many cases contributes to making an author popular then they have a monopoly on the author's work. Since there is no competition the publisher tends to charge as much as the market will bear. It is a sign of an unfair market but I'm not sure I would trust any legislator to fix it.

Nonsense. Everyone has (essentially) a monopoly on their own work. They decide how to sell it. If they choose to go through a single publisher, that's their choice. Or they could choose to go through multiple publishers - using a different publisher for each book. Or they could choose to publish their own work. There's nothing unfair about that.

Quote:

Originally Posted by Sacto Joe

For those of us that love real books, the benefit is clear: The profit from ebooks helps subsidize the continued sale and production of real books, by keeping the publishers in business. Amazon's approach would have destroyed the publishing houses.

That's true, but it's up to the authors (and the publishers who represent the authors) to choose how they want to sell the product. If an author insists on ONLY paper copies, they can do that (if their publisher will agree). OTOH, an author can insist on only e-Books. They can choose to sign up for Amazon's model. They can choose to sign up for Apple's agency model. It's not up to the government or anyone else to tell someone how to sell their work.

"I'm way over my head when it comes to technical issues like this"Gatorguy 5/31/13

You left off one thing:
Apple lets the authors/publishers set whatever price they want and is not involved in setting prices.

So how is Apple guilty of anti-competitive actions? Seems to me that letting the 10,000 publishers set their own prices is PRO-competition.

-

Except for that favored nation clause. A term in being in iBooks was that you agree to never sell lower anywhere else. Many folks felt that that rule pushed companies to go iBooks only, or was at least trying to.

What utter BS is this?
If I can run my store more efficiently by operating a hi-tech cash register, rather than using an abacus, low and behold, the cash register may pay for itself.
What if my hugely lower operating costs allow me to offer lower prices?

Is this unlawful competition?

My take is this: it would be an upside down world if eBooks would cause book prices to rise.
We buy the information either in digital form with minimal distribution costs, or we pay for the machinery of printing, shipping, shelf storage and the supporting sales force. Which has the potential of becoming cheaper.

It is just outrageous that not ALL eBook prices are lower than hard hopy prices. Duh!

For the umpteenth time, the price is based on what people are willing to pay. Seeing as how the ebook business is booming, people clearly value the convenience of a digital book enough to pay the same or similar to the physical copy.

The market will sort things out. Clearly you don't value ebooks enough to warrant paying the demanded price. If enough people feel that way, demand will falter, and the prices will come down.

If the selling price is higher than the cost to produce plus a fair profit then in a normal market competition will force the price down. It is a different problem though with books. If a publisher signs a popular author or in many cases contributes to making an author popular then they have a monopoly on the author's work. Since there is no competition the publisher tends to charge as much as the market will bear. It is a sign of an unfair market but I'm not sure I would trust any legislator to fix it.

Also, consumers aren't *owed* anything. The owner of the content can set the price at whatever they want, or use whatever model they want. They have the copyright, which, similar to a patent, IS a legal monopoly.

Monopolies aren't illegal. Abusing market power with a monopoly is. But in this case, content owners are still bound by the realities of the market; there is a certain price the market will bear, and the task is to find out what price.

For instance, a publisher could have decided to sell the Steve Jobs biography for a "ridiculous" price of $100. I'm assuming very few people would buy it, even though you could get it no where else.

This hyperbole illustrates that just because someone has a monopoly on the rights of certain content doesn't mean they hold all the cards. People aren't entitled to read "Steve Jobs"; it's not a necessity needing regulation. Nor will the pay anything to read it; they can easily read something else, watch TV, go to a movie, a pass the time any other way. If the price is at a point where the value they place on it outweighs the asking price, a person will buy it. If enough people feel the same way, that's the price the market will bear.

It doesn't matter at all the actual costs of production. Only the final price and the value proposition matter.

And as to your final point, the publisher SHOULD charge as much as the market will bear, as this is a sign of an efficient market. Continual undervaluing of products and price depression have caused a lot of the financial mess. Sure you may have more money in the pocket, but the corporation now has less money to pay people, causing a reduction in jobs. Capitalism succeeding is predicated on the constant flow of money, and more money flowing is better.

Still annoys me that many e-books are the same price as paperback books, it's pure profiteering.

At the end of the day e-books do not have to be printed & then shipped, sure you'll still have Apple/Amazon's mark up but then you'd have that at a bookstore. As it's digital delivery Apple/Amazon don't have to have retail stores full of staff that needs to be paid for.

E-books, just like all downloadable content should be cheaper full stop!

Not only that but they should also contain all the pictures the paper book contains. I once bought the Kindle version of a book I found interesting at Amazon. It turned out that they had stripped out all the figures, which made the book basically unreadable. Thank you, that was the last time I burnt my fingers on Kindle e-books from Amazon.

For those of us that love real books, the benefit is clear: The profit from ebooks helps subsidize the continued sale and production of real books, by keeping the publishers in business. Amazon's approach would have destroyed the publishing houses.

Also, it bears pointing out that Amazon wasn't selling ebooks below cost because they wanted to perform a public service. Selling ebooks below cost is an unsustainable proposition. The only reason Amazon was doing this was they wanted to kill the competition and establish a monopoly on ebook retailing. Once that monopoly is cemented, guess which way ebook prices would have headed?